Definition of General Security Agreement

A general security agreement (GSA) is a legal document that creates a security interest in the property of a borrower or debtor. This security interest is established to secure the repayment of a loan or other financial obligation. The GSA can be used to secure both present and future debts.

The GSA is a standard document used in commercial loan transactions, particularly in secured lending. It provides a lender with the right to claim the pledged collateral in case of default without the need for a court order. The agreement outlines the terms of the security interest, including the collateral and the conditions under which the lender can take control of it.

In essence, the GSA is a contract between a borrower and a lender where the borrower pledges certain assets or property as collateral to secure a loan or other financial obligation. The collateral can include a broad range of assets such as real estate, accounts receivable, inventory, or equipment.

The GSA is a critical document for lenders as it ensures that they have a right to the borrower`s property if they fail to repay the loan. This provides the lender with a level of protection in case the borrower defaults, and the GSA can be used to recover the outstanding debt.

The GSA is registered with the Personal Property Security Registry in the jurisdiction where the borrower`s property is located. This registration creates a priority for the lender over any subsequent creditors who may come in later.

In conclusion, a general security agreement is a legal document that provides a lender with a security interest in the borrower`s property to secure a loan or other financial obligation. It establishes the terms and conditions under which the lender can take control of the collateral in case of default. Lenders use the GSA to protect their investment by ensuring that they have rights to the borrower`s property in case of default.